A Pricing Lesson From Restaurants

This post is short, sweet and provides a nugget of insight into pricing. Based on research by the folks at Neuromarketing, it turns out that the symbol/format used to communicate the price of certain good can have an affect on consumer behaviour.

My last Neuromarketing post, Neuro-Menus and Restaurant Psychology, talked about various things restaurant menu engineers do to maximize sales and profits. I think it’s worth calling special attention to one aspect touched on in that post: how price presentation affects sales. Not, the price itself, which of course is very important, but the way the price is displayed to the diner.

A study by Sybil S. Yang, Sheryl E. Kimes Ph.D., and Mauro M. Sessarego of Cornell University, $ or Dollars: Effects of Menu-price Formats on Restaurant Checks, looked at several common restaurant price display techniques:

• Numerical with Dollar Sign: $12.00
• Numerical without Dollar Sign or Decimals: 12.
• Written: twelve dollars

The researchers expected that the written/scripted prices would perform best, but they found that the guests with the simple numeral prices spent significantly more than the other two groups.

To me, this seems to be consistent with research that shows the subliminal effect of currency symbols. Subjects exposed to subtle currency symbols (e.g., a poster or a screensaver while “waiting” for the experiment to begin) showed less willingness to help others and actually positioned their chairs farther apart from other subjects than those who saw neutral symbols like fish. (See Thinking About Money.)

For those in the restaurant business, the implication is obvious: get rid of the dollar signs. But other businesses might boost their sales by the same techique – simple prices, no currency symbols, and as little as possible to trigger the “money effect” in people’s brains.

Source - Neuromarketing